The problem? It’s a retroactive bill, meaning that toys that are currently on the market must be tested and certified before they can be sold. The bill not only includes toys, but books, clothing, cassettes, CD’s, paper, and inks. This will effectively shut down small businesses that sell or resell childrens’ items since they cannot afford to test their stock. Mass produced items can have just samples tested, but homemade products will have to have every one tested.

Is Feb. 10 financial doomsday for thousands?

New law could force companies into ruin

A new government regulation scheduled to take effect next month has thousands of retailers, thrift stores and small businesses worried they will be forced to permanently close their doors – and destroy their merchandise.

The law is expected to have such a devastating impact that Feb. 10 is now unofficially known as “National Bankruptcy Day.”

Congress passed the Consumer Product Safety Improvement Act of 2008, or HR 4040, a retroactive rule mandating that all items sold for use by children under 12 must be tested by an independent party for lead and phthalates, which are chemicals used to make plastics more pliable.

All untested items, regardless of lead content, are to be declared “banned hazardous products.” The CPSC has already determined the law applies to every children’s item on shelves, not just to items made beginning Feb. 10.

The regulations could force thousands of businesses – especially smaller ones that cannot afford the cost of lead testing – to throw away truckloads of children’s clothing, books, toys, furniture and other children’s items and even force them to close their doors.

Children’s books

Valerie Jacobsen and her husband, Paul, support their family of 13 by selling literature at Jacobsen Books in Clinton, Wis. Her family has contracts with local libraries to buy and sell overstocked books – an arrangement that draws income for both parties.

However, Jacobsen told WND that lead testing is estimated to cost $100 to $400 for each of her used children’s books because she does not buy in bulk, and each batch of merchandise is required to be tested.

“There’s a big difference between me and Wal-Mart or Toys ‘R’ Us,” she said. “They’ll have a batch of 50,000. Everything I have is a batch of one because I don’t know its history. I’m looking at a testing cost of about $1.2 million. I would normally sell my full inventory of all children’s products for probably $15,000. So, it’s effectively a ban.”

Valerie Jacobsen

The Consumer Product Safety Commission states that lead testing requirements apply to children’s books, cassettes and CDs, printed game boards, posters and other printed goods used for children’s education. While it does claim some printing inks will be exempt, paper, cardboard, bindings, glues, laminates and other inks are still subject to regulation and require testing.

Jacobsen said that unless the new law is repealed or substantially modified, it could devastate her family business.

“I don’t want to stop selling children’s books on Feb. 9,” she said. “I need that income. We provide a lot of reading for a lot of little kids. I went into this business because I thought that books were good for children’s mental development. That opinion hasn’t changed. And the government’s ruling is essentially saying they’re hazardous for children’s mental development because they might contain lead. We just have no evidence that they do.”

Children’s second-hand clothing

Jacobsen said she often shops at second-hand stores for her 11 children because she can buy quality clothing at low prices.

“Over the years I have always tried to make the most of our money, so we’ll go to Goodwill,” she said. “To be honest, I’d rather go to Goodwill and get a brand-name item that’s hardly been worn and pay $3.99 for it than to go to Wal-Mart and pay $13.99 for something that in six weeks from now is not going to worth anything.”

But now some thrift and consignment stores are in a panic over the new regulation because it extends to children’s clothing, shoes and other items as well.

Cindy Retmier owns a consignment store called Jordan’s Closet in El Dorado Hills, Calif. She told KXTV News 10 that the law could close her business.

“[W]e’ve been passing kids clothing down for centuries,” she said. “Now all of sudden you can’t do it because there might be too much lead in one item out of a thousand? I mean it’s ridiculous they’ve taken it to the extent they’ve taken it right now.”

Goodwill

She estimates testing for each of her clothing articles to run between $300 and $1,500. The Consumer Product Safety Commission said it may consider exempting clothing and toys made from natural materials such as wool or wood, but paint and dyes on the products are still required to be tested.

“We only sell stuff for an average of $10 so, of course that doesn’t make sense,” Ritmier said.

Even Goodwill Industries told the station it may be forced to stop selling clothing and other children’s items if testing is too expensive. The move could affect consumers who donate items for tax write-offs if the stores are not able to sell them.

“A huge hit for us and a huge hit for consumers that are trying to save a dollar in this economy,” Goodwill’s Mark Klingler told KXTV. “We’ll have to analyze it. It may involve not selling if we can’t realistically test everything.”

Likewise, Shauna Sloan, founder of the Salt Lake City-based Kid to Kid Franchise, which sells used children’s clothing in 75 stores across the country, told the Los Angeles Times his business could end.

“We will have to lock our doors and file for bankruptcy,” he said.

Small toy businesses

All children’s toys and furniture also fall under strict requirements for independent lead and phthalate testing. Some small toy businesses say lead testing alone costs more than $4,000 per item – a price some say only large companies like Mattel and Fisher Price can afford to pay.

“The only people who can do that now are the ones who actually put this scare into effect and actually caused the problem,” Amy Evan’s, owner of Baby’s Boutique in Chico, Calif., told CBS’ KHSL.

Home-based and small businesses

Shelsie Hall told KXTV she makes hair bows and jewelry for children and sells them online to support her family.

Now her small business is threatened by the measure because those products must be tested.

“[M]y items sell for $4 to $10 and I make a lot of different things. So I couldn’t just test one; I would have to test every item,” she said.

One blogger who identifies herself as “Tina” has a home-based business making and selling cloth diapers online. She said a U.S. lab quoted a price of $75 to test each component of her diapers.

“I have at least two different fabrics, thread, snaps and elastic in a diaper,” she wrote. “$375 to test each different combination of fabrics/snaps/thread/size combinations? That is insane.”

She continued, “I am but one of many micro-manufacturers who will be forced to give up the American dream of owning my own business because of this legislation.”

Tina said retailers purchase inventory with loans secured by the value of that inventory.

“What happens to these lenders and retailers when the value of that inventory goes to zero?” she asked. “It is conceivable, at least to me, that retailers will be the next group in front of Congress asking for a bailout.”

The act’s broad wording could extend to children’s items sold on eBay, Craig’s List, Amazon. Critics also say landfills will be hit hard if stores, distributors and families simply throw their untested items away rather than face prosecution. And new clothing, toys, furniture and books at large retailers could become more expensive to cover third-party testing costs.

Tentative exemptions

While the Consumer Product Safety Commission administers the law, it may only be changed by Congress. Some exemptions approved Tuesday by the commission’s two members, but not formally adopted, include the following:

Items with lead parts that a child cannot access;

Clothing, toys and other goods made of natural materials such as cotton and wood; and

Electronics that are impossible to make without lead.

But the tentative exemptions do little to reassure most businesses and families who will be affected by the law. Final rules are not scheduled for approval until after Feb. 10, when the rules take effect.

The measure raises the CPSC budget each year until 2015, at which time the agency’s budget would be $156 million. It also allows state attorneys general to take civil action against those who violate the strict regulations.

While some may continue to sell their children’s products and disobey the law, Jacobsen told WND she’s not taking any chances at her bookstore.

“Would I ever get caught? Probably not,” she said. “But they are talking about $100,000 fines and jail terms of up to five years. I’m not comfortable operating with that law on the books.”

Instead, she said she will fight the measure and raise public awareness.

“I’m planning to put a chain across our children’s department and put up a sign that says, “Banned hazardous material,'” she said. “I’ll ask my customers as they come in to please write their congressmen, call senators and get the word out there. I will tell them, ‘I can let you in now,’ but four weeks from now, I won’t be able to do that.”

Jacobsen’s plans don’t stop there.

“I am going to go to my legislator’s office, and I’m going to take my children’s books there,” she said. “I’m going to ask him, ‘Do you want me to put these in the landfill? Do you want me to burn these?’ What am I going to do with them? I can’t just warehouse them until they come to their senses.”

U.S. Capitol

She suggested the public begin writing and calling lawmakers and demanding exemptions to the law.

“I think the whole thing should be trashed, personally,” she said. “It was so short-sighted. People who were doing the importing of lead are going to be rewarded when little companies like mine go under. When you take everything on a retailer’s shelf and tell them they cannot sell it, that’s bankruptcy.”